Grain prices likely to drive US agriculture in 2013

Grain prices will likely again drive U.S. agriculture in 2013, according to several speakers at the recent Tennessee agriculture leadership forum,made possible by Farm Credit Mid-America.

Near record low stocks of soybeans and corn and wheat will keep demand for these grain products high and prices good for farmers through the 2013 season.

However, the news is not universally good for farmers. Livestock and dairy farmers will continue to be in a high stress economic situation due to continually increasing grain prices, economists contend.

Terry Barr, senior director for industry research for Co-Bank ACB, says the outlook for the U.S. economy as a whole is not nearly so rosy. He says the world economy is not getting better.

Barr says 60 percent of U.S. economic growth is determined by consumer spending. Debt, unemployment and political uncertainty will limit growth in these sectors in 2013.

To underline his point, Barr notes that while unemployment may be down to 7.8 percent, under-employment in the United States is still nearly 15 percent.

Home prices, he says, have increased by 1 to 1.5 percent per month over the past three months. However, nationwide home prices remain about 30 percent lower than the price levels of 2006.

Between June 2006 and July 2012 central banks worldwide have injected $6 trillion into the global economy. Countries like the United States, Great Britain, Japan and Switzerland have shouldered most of the load.

By early 2013, the United States will face yet another economic crossroad. The U.S. Congress will have to decide whether to raise the debt limit and whether to extend tax cuts.

“How Congress and the president face these issues will go a long way toward determining U.S. economic recovery,” Barr says.

What does a good and bad financial outlook mean for farmers, especially those in the Southeast, for the upcoming 2013 planting season?